Articles Posted in Property Distribution

This second article from attorney and mediator Rosalyn A. Metzger on Mediation focuses on how the process addresses financial issues involved in divorce. To read the first article, see “The ABC’s of Mediation – Part I: The Process.”

Negotiating Financial Issues

Mediation Financial Issues - photo of notebooks labeled "assets", eyeglasses, pens, and laptop on a tablePart of divorce mediation involves financial issues. Although you won’t need any documents for the first session, you will need to begin assembling financial statements, preferably from the same end date so that the values come from the same time frame. This way, when you reach the financial issues that are part of every divorce, you are prepared. It often can take a while to obtain all of the financial information necessary.

Tax-implications-400-07978565d-300x200Filing for divorce in New Jersey is not complicated, but negotiating financial matters and property distribution issues in the  divorce proceedings can be. As couples simultaneously close the door on one stage of their life and work toward building the next stage, they face a number of decisions that, if not handled correctly, could have significant consequences later. One of the biggest problems is couples often make these decisions based on emotional reactions rather than a full understanding of future implications. This is especially true when it comes to tax matters.

Tax planning should play a prominent role in the divorce process. Unfortunately, the tax implications of many divorce-related decisions are often misunderstood, if not overlooked, by emotionally wrought couples. A recent Forbes magazine article, “Taxes and Family Law: A Cheat Sheet of What You Need To Know” just scratches the surface of some of the things you should understand about taxes and their impact on your divorce process. After reading the article, it’s easy to understand why some people choose to add a tax professional to their divorce team.

gray-divorce-400-05339652d-300x201Gray divorce — the term given to couples age 50 and older who terminate their marriages — seems to be a growing trend.

The National Center for Health Statistics reported that in 2015 there were 10 divorced people for every 1,000 married people age 50 and older in the U.S., compared with 5 divorced people for every 1,000 married people in that age group in 1990. In the 65+ age group, the 2015 divorce rate was 6 for every 1,000 married persons, which was 3 times the 1990 rate. See “A costly ‘gray divorce’ can upend your retirement plans.”

While couples at this stage of life may not have to worry about such issues as child custody and support, divorce still takes an emotional toll and can endanger the couple’s retirement funds. If these funds are not properly divided and transferred, the couple risks tax consequences and possible penalties that can be devastating to their financial well-being. To learn about important steps to take to protect your retirement funds in the event of a gray divorce, read “5 Retirement Moves for Recently Divorced Couples.”

Protecting family-owned business from divorce - photo of couple standing outside storefront of grocery businessFamily-owned or controlled businesses are an important segment of the American economy. They account for about 90% of all American businesses, from large retailers like Walmart to small mom-and-pop shops, and produce more than half of the country’s gross domestic product. These businesses face all the same risks as publicly-owned businesses do – growing competition, changing technology, increasing costs of supplies, and the like. On top of that they face one more risk that their publicly-owned counterparts do not – divorce.

What happens to a business that is owned by a couple facing divorce depends largely on the steps the couple took, if any, to protect the business before their marital troubles began. Often the family has the majority of its assets tied up in the business, so one spouse buying the other out is not always an option. A recent MarketWatch article, “How to protect your family business during a divorce,” discusses different options available to couples who want to protect the businesses they worked so hard to create.

photos of two pet dogs standing next to owner's legs, all wearing bright green rain bootsFor an animal lover, a pet is more than a possession – it’s a member of the family, and a beloved one at that. But what happens to that “family member” when the family unit dissolves through divorce?

Most courts don’t share the sentiment that pets are family but rather view pets as property. However, this “property” is not as easy to distribute as say a house or a car. When it comes to deciding the post-divorce fate of a pet, courts consider the people involved rather than the animal: Who paid for the pet? Who cares for the pet? If children are involved, should the animal stay with them? That’s about to change, however, for one state.

Alaska recently became the first state to amend its divorce statutes so that courts are now required to consider the well-being of the animal in divorce cases (read, “In a first, Alaska divorce courts will now treat pets like children”). The amendments will even allow judges to award joint custody of a pet, if that arrangement is in best interest of the animal, and to include pets when issuing protective orders in cases of domestic violence. Time will tell if more states will follow this lead.

Property Distribution: Photo of gray house with white trim with double Adirondack chair on porchThe distribution of property in connection with a divorce is a complex legal issue. Even answers to seemingly simple questions like who should get a marital home that was purchased before the wedding may surprise you.

Courts consider a number of factors when determining the distribution of property, including whether or not the couple has a pre- or post-nuptial agreement, and if the state in which the couple lives is a community property or common law state.

New Jersey happens to be an equitable distribution, or common law, state. Even here, ownership documentation like deeds and registrations alone may not be enough to establish who is entitled to what property. Courts consider other mitigating factors in making their determination. In the case of a marital home, for example, courts will consider not only who initially purchased the home, but also whether or not marital funds were used to pay the mortgage or make improvement to the home. For more insight into how marital property is treated in divorce proceedings, read “Martial Home Purchased Before Marriage: How Is It Treated?

forensic-accounting-400-06176410dA crucial part of the divorce process is dividing up the couple’s assets and debts in as equitable a manner as possible. Sometimes this distribution of assets is simple, while other times it is much more complicated, especially for couples who have complex financial portfolios that include such things as stock options and restricted stocks, deferred compensation, retirement and insurance plans, properties located in other states or countries, and exceptionally valuable tangible assets such as artwork, antiques or collectibles.

The settlement options you agree to during your divorce proceedings can have a long-term impact on your financial and tax situation. If your situation is complex, it may be prudent to seek the help of a financial specialist, such as a forensic accountant, before agreeing to terms. For more on how a forensic accountant may be able to help in your divorce negotiations, read the New Jersey Business Magazine’s article, “Forensic Accounting During Divorce Proceedings.”

property-distribution-400-05370431dYou’re getting a divorce. You want the house, the car, the vacation timeshare and anything else you can get simply because you believe your soon-to-be ex is a louse and you deserve to be compensated for your anguish. Before you hand your list of demands to your divorce attorney, however, there are a number of issues you should consider.

Property distribution in relation to a divorce is more complicated than simply deciding who deserves what. You need to understand the difference between separate property and marital property and what affect comingling the two can have. Also, in addition to the current value of the property, you need to consider the short- and long-term effects of ownership. For a closer look at how property is distributed in a divorce, read Jeff Landers’ article, “Understanding How Assets Get Divided in Divorce.”

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If you are considering a prenuptial agreement, carefully review all aspects of the contract before signing. A recent revision to the New Jersey Uniform Premarital and Pre-Civil Union Agreement Act makes it harder than before to break that agreement, even if circumstances change. (1)

A prenuptial agreement, also referred to as a premarital or pre-civil union agreement in New Jersey, is a contract between two people contemplating a lifelong union. The contract outlines, among other things, distribution of assets should the relationship end. (2) One of the biggest problems is that couples enter into these contracts at a time when the dissolution of their relationship is the last thing on their minds. It is important not to let your emotional bliss stand in the way of looking at the contract realistically.

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Deciding the fate of the family pet in a divorce is a little more complicated than deciding who gets Great Aunt Sara’s heirloom trinkets, yet most states consider pets as mere property. New Jersey, however, is one state that recognizes the uniqueness of pets and the sentimental value we attach to them. In fact, New Jersey courts will enforce sharing agreements entered into by divorcing couples.

This opinion dates back to the March 2009 case of Houseman v. Dare. As an engaged couple, Ms. Houseman and Mr. Dare shared ownership of a pug named Dexter. When the engagement ended, they reached an agreement on sharing their dog. This worked well until Ms. Houseman went on vacation, leaving Dexter with Mr. Dare. Upon her return, she learned Mr. Dare reneged on the agreement wanting Dexter to himself. Ms. Houseman filed suit. (1)

The lower court’s initial decision was to not enforce the sharing agreement. A two-year battle ensued and a New Jersey Appeals Court reversed the lower court’s decision to not enforce the sharing agreement, awarding monetary compensation instead. The Appeals Court ruled that a judge can, in fact, enforce sharing agreements or, if necessary, determine who gets the family pet based on sentimental value.